European Summary and Highlights 29 Jan
The EUR and scandis were generally weaker in the European morning, while then USD was otherwise a little weaker.
European morning session
The EUR and scandis were generally weaker in the European morning, while then USD was otherwise a little weaker. EUR/USD fell 30 pips to 1.0815, but EUR/JPY fell around 60 pips to trade close to 159.80, while EUR/CHF fell 40 pips to 0.9325. AUD and CAD also gained a little ground against the USD. AUD rising 10 pips to 0.66 and USD/CAD falling 10 pips to 1.3440. GBP/USD was little changed.
EUR/SEK edged slightly higher after weaker than expected Swedish Q4 GDP data which showed a rise of 0.1% q/q against market consensus of a 0.3% gain, but finished the morning little changed, while EUR/NOK fell a couple of figures despite another weak credit indicator for December, hitting another post 1990s low of 3.4% y/y.
The weakness of the EUR may reflect some impact on European risk sentiment from the drone strike at the weekend that killed three US soldiers in Jordan. Yields in the US and Europe were generally lower, but equities remained resilient.
Asia session
Over the weekend, it is reported that three U.S. soldiers are killed in Jordan from a drone attack launched by Iran-backed militias. The U.S. is reported to planning retaliatory military action and would escalate the tension in the Middle East. Oil and Gold jumped higher at open but oil has retraced most gains and is trying to close the gap. U.S. Treasury Yields are lower across the curve while JGB yields are higher. USD/JPY is trading 0.06% lower at 148.05.
While the key headline over the weekend is no doubt an escalation of geopolitical tension, we also have multiple headlines crossing the wires for the Chinese financial sector. China plans to incorporate 3 of its big managers (Cinda, Orient, Great Wall) of bad debts into sovereign wealth fund, China Investment Corp. They also tightens short selling restrictions. The Hong Kong Court ordered Evergrande's imminent liquidation after months of dragging on. At the end of the day, regional equities are in the green and see the Aussie being supported. The AUD/USD is trading 0.27% higher at 0.6594 as commodity prices are solid on geopolitical tension, NZD/USD is 0.06% higher at 0.6095 while USD/CAD rose 0.03% as oil retraced most of the gap higher. Elsewhere, EUR/USD is 0.11% lower and GBP/USD is unchanged.